PAYE Settlement Agreements: Call for Evidence

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If expenses and benefits meet the criteria, the PSA allow employers to settle the Income Tax and National Insurance Contributions (NICs) Class 1B due on behalf of their employees. HMRC have issued a Call for Evidence which seeks to explore how they are used in practice

For an expense or benefit to be considered in a PSA, it must meet the criteria of being either: 

  • ‘Minor’, i.e. small in value;
  • ‘Irregular’, i.e. something that does not happen all the time; or
  • ‘Impracticable’, i.e. something where it is difficult to place a value on a particular employee, for example staff entertainment 

If granted by HMRC, the PSA requires the employer to calculate the tax and Class 1B liability every years, possibly via form PSA1 or an informal calculation.  Then, by 19 October (or 22nd if paying electronically), the employer needs to pay HMRC the calculated liability.

On 23 June 2026, HMRC published a Call for Evidence designed to gather information on how PSAs operate in practice.  Pay As You Earn (PAYE) Settlement Agreements (PSAs) are used in practice.  This may result in operational changes and the Call focuses on the following areas:

  • How PSAs are used by employers / agents / bookkeepers etc
  • How organisations decide what to include in a PSA, i.e. is the scope for eligibility clear and is their confusion with the £50 Trivial Benefits regime?;
  • Managing, operating and agreeing PSAs, i.e. the time, resources or cost implications and would a definitive list of what can be included in PSAs be helpful?;
  • The PSA calculations; and
  • The impacts across different employers groups, particularly whether impacts differ for Small and Medium-sized Enterprises (SMEs) compared to larger employers 

For Bookkeepers

The Call is open until 15 September 2026 and ICB encourages members to respond in one of two ways:

1.     E-Mail to payeconsultations@hmrc.gov.uk; or

2.     In writing: M Stephenson DNO, Strategy and Policy, 5th Floor, HMRC BP5001, Benton Park View, Newcastle Upon Tyne, NE98 1ZZ

Note there is no online option so responses should refer to the 24 Call for Evidence questions and, possibly, prepare responses on a document which can be attached to an E-Mail or posted to HMRC in Newcastle.

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